U.S. employers reinvesting in HR spending, staffing

Organizations with mature HR functions spend more on strategic HR services: Study
|hrreporter.com|Last Updated: 06/10/2011

U.S. organizations are starting to reinvest in human resources services and staffing following the economic downturn of the past three years, according to a report released by Bersin & Associates, a research and consulting firm, in partnership with Human Resource Executive magazine.

Organizations on average spent 1.4 per cent more on HR programs, services and systems in 2011 than in 2010, with US$1,218 spent per employee, found study HR Factbook 2011, based on a study of about 300 HR professionals in the United States.

Some of these funds went to hire additional staff, as HR headcount increased an average of 1.8 per cent this year. Most organizations focused investments on core services such as compensation, benefits, payroll and employee relations, which accounted for about 60 cents for every HR dollar. About one-third of the HR budget went to talent management, as organizations invested more in recruiting and development initiatives, found the study.

"The increased spending on human resources shows how businesses around the world are rapidly starting to rebuild their talent pipelines and cores services to engage and retain people," said Josh Bersin, CEO and president of Bersin & Associates.

On average, about one in 10 HR dollars went to strategic HR services such as employee engagement, workforce planning and measurement, and wellness programs. However, organizations with more mature HR functions spent two to three times as much on these initiatives, found the study.

"Organizations at all levels are now talent-constrained and business leaders want to re-engage their workforces to drive innovation and execution," said Bersin. "Human resources teams are being asked to step up their game: creating more innovative recruiting programs, leveraging the power of social networking for internal and external communications, developing emerging leaders and helping the organization mobilize talent to take advantage of global business opportunities. These are urgent business problems which require greater investments in HR."

Organizations with mature HR functions clearly will emerge from the recession ahead of the game, said Bersin & Associates principal analyst Karen O'Leonard.

"These mature HR organizations have strong core services and talent management initiatives, enabling their teams to focus on strategic people issues," she said. "Organizations with such mature HR functions will be better able to hire and retain their key talent, expand more quickly and recover from the recession faster than companies with less mature and effective HR teams."

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